Shares of LG Electronics India surged 10% on Friday after its June-quarter (Q1FY27) earnings, helping the stock close above ₹1,700 for the first time since its listing in October. The optimism was not just about the earnings beat, but also reflected growing confidence that the earnings slump seen through FY26 may finally be behind the company.
Consolidated revenue rose 15.5% year-on-year to ₹7,233 crore in Q1FY27, while Ebitda (earnings before interest, taxes, depreciation and amortization) jumped 26.2% to ₹904 crore, with margins expanding 106 basis points (bps), helped by slower growth in staff costs and other expenses. To some extent, the headline growth benefited from a favourable base. Profit had declined year-on-year in every quarter of FY26, as margins were weighed down by commodity inflation, currency headwinds, geopolitical challenges and higher festive spending to gain market share amid weak summer-led demand.
The operating environment remains far from benign, with geopolitical tensions and supply-chain pressures persisting. Yet LG managed to buck the trend in Q1FY27, helped by a richer product mix, calibrated price hikes and operating leverage, which more than offset higher commodity costs.
Its home entertainment division was the standout performer, with revenue rising 22% to ₹1,656 crore and Ebit surging almost 50% to ₹316 crore, implying a 341-bps expansion in Ebit margin. Home appliances and air solutions revenue grew 13.6% to ₹5,576 crore, while Ebit margin rose just 10 bps to 11.6%, even as premium categories such as French-door refrigerators, dishwashers and washing machines of 8 kg and above outpaced the broader segment.
Beyond premiumization, LG’s Essential Series, aimed at value-conscious consumers in tier-II and tier-III cities, is also gaining traction among first-time buyers. It has sold more than 0.5 million units in the first six months of 2026. Exports, B2B sales and annual maintenance contracts are emerging as additional growth drivers.
Another long-term tailwind is localization, which stands at 55% for LG, and is targeted to reach 65% in 3-4 years. The government's restrictions on compressor imports have strengthened LG’s competitive position, thanks to its 1 million units of AC compressor capacity. Another 2 million units are expected by Q3FY27 at its upcoming Sri City facility in Andhra Pradesh. Its refrigerator compressor capacity of 7 million units already exceeds its internal requirements.
The Sri City facility will also expand manufacturing capacity and support exports. Management acknowledged that the plant will initially entail higher costs, but it expects scale benefits and greater in-house manufacturing to more than offset these over time. The ₹5,000 crore investment in Sri City is expected to be funded entirely through internal accruals, keeping the company’s debt profile in check.
With washing machines and TVs expected to drive growth in the second half of the fiscal year, and refrigerator and AC sales supported by premiumization and replacement demand, management expects to sustain growth at around 20%. But demand remains contingent on favourable weather patterns and economic growth, while commodity prices and currency movements could once again pressure margins.
Premiumization and inroads into the mass market will also need to hold for brokerages’ valuations to be justified. Motilal Oswal Financial Services, for instance, values LG Electronics India at 45x estimated FY28 earnings and has raised its target price to ₹2,000 per share from ₹1,800.